The former Scottish Labour leader says her party “failed to keep its promise” to pay her legal costs for a defamation action brought by pro-independence blogger, Stuart Campbell.
Ms Dugdale believes the decision has been made on political grounds.
Yesterday, the Lothians MSP told the Daily Record she felt “crushed” by the move and that she had “lost the ability to cope” for a few days. The newspaper has since said it will provide support to Ms Dugdale.
Ms Dugdale is being sued in a £25,000 defamation case by Mr Campbell, who runs the Wings Over Scotland website.
He took action over an article Dugdale wrote in her Daily Record column in March last year when she alleged he’d sent “homophobic tweets”.
The UK Labour Party had previously paid for Ms Dugdale’s representation in court, but has now cut this off.
Ms Dugdale told the BBC: “First and foremost, the Labour Party made a promise and it’s not a good look for any political party to fail to keep its promise.
“And this is what it’s doing to one of its own, so how can people trust that party in any other aspect of life if this is what’s happening? I think there is a real presentational problem for the party in that regard
“Also, this is a party that is fundamentally about fairness, equality and justice and they put me in the most horrendous position. I really hope that they change their minds.”
Ms Dugdale added: “I genuinely think that this is a political decision. People don’t like the truth I’m speaking about Brexit and the damage that it’s going to do to Scotland and the UK economy.”
Mary Fee, Chair of the Scottish Labour Parliamentary Group, said: “On Tuesday 25 September, Kezia Dugdale MSP updated the Scottish Labour parliamentary group about the status of the legal action against her.
“The Labour group expressed full support and solidarity for Kezia in the case.” Labour say they have already spent £90,000 on the case.
More to follow.